Growing losses force BSkyB to close Open.

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BSKYB, the satellite broadcaster, is about to dismantle Open, its interactive home shopping service, and integrate the business into its own new media operations.
The move, which could lead to significant job cuts, is designed to stem mounting losses at the unit, which topped £116 million for the six months to December 31.

The announcement is expected to come next Wednesday when BSkyB, in which News International, has a 37.5 per cent stake, announces its quarterly results.

Open is the brand name of British Interactive Broadcasting, a consortium set up by BSkyB, HSBC, Matsushita and BT. Its main function was to provide money to subsidise the distribution of Sky’s new digital set-top boxes. In return, the partners were offered a handling fee for each transaction executed over the system.

However, sales through Open have been disappointing, relative to the costs of running the business. At the time of Sky’s interim results in February, the company said that it had received just 650,000 retail orders over the system After the restructuring BSkyB is expected to concentrate more on areas such as online betting and the sale of products linked more closely to Sky’s own television programmes. Open has a total staff of 420 compared with about 200 working in new media at Sky.

As a result of the reorganisation John Swingewood, Sky’s director of new media, is expected to leave the company and the managing director of Open, Jon Florsheim, will run the merged business. Mr Florsheim is also BSkyB’s director of sales.

BT, the remaining minority shareholder in BIB with a 19.9 per cent stake, is expected to exercise its right to take compensation for the holding, in BSkyB shares.
 
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